Millions risk undernourishment as wheat prices surge, FAO and OECD warn

© Reuters. FILE PHOTO: A turret of a destroyed armoured fighting vehicle is seen in a wheat field, as Russia's attack on Ukraine continues, outside the town of Ichnia, in Chernihiv region, Ukraine June 7, 2022. REUTERS/Vladyslav Musiienko/File Photo

PARIS (Reuters) - The war in Ukraine that has stalled its wheat exports will keep global prices high into the 2022/23 season, putting millions more people at risk of undernourishment, the United Nations' food agency and the OECD said on Wednesday.

Russia and Ukraine are the world's first and fifth largest wheat exporters accounting for 20% and 10% of global sales, respectively, but Russia's invasion of Ukraine and the closure of the Sea of Azov and the Black Sea, nearly halted exports.

Grain exports from Ukraine are only 20% of capacity as alternative channels, such as rail and road, are not as efficient as maritime routes, the Food and Agriculture Organization (FAO) and the Organisation for Economic Cooperation and Development (OECD) said.

FAO/OECD projections suggest that 2022/23 wheat prices could be 19% above pre-war levels if Ukraine fully loses its export capacity and 34% higher if in addition Russia's exports are reduced by half. The 2022/23 season starts July 1 in the northern hemisphere.

"With food security already under pressure the consequences would be dire, especially for the most vulnerable," OECD Secretary-General Mathias Cormann said during a presentation of the FAO/OECD Agricultural Outlook 2022-2031.

Some 20 million tonnes of grain have to leave Ukraine by the end of next month to make room for this year's crops and avoid food shortages in Africa, the European Commission said last month. Diplomatic talks are ongoing to open up an alternative sea route.

If Russian exports were affected, undernourishment would increase by about 1% globally in 2022/23, equivalent to between about eight and 13 million people, depending on the assumed severity of the export reduction, the FAO said in a separate study.

A scenario simulating a severe export shortfall from Ukraine and Russia continuing in 2022/23 and 2023/24, and assuming no global production response, suggests an increase in the number of undernourished by close to 19 million people in 2023/24.

(Makes clear Russia is the largest wheat exporter in 2nd paragraph)